Scenario D

question 76

Multiple Choice

Scenario D. Use the information given below to answer the questions that follow. Power Nutrition Inc. sells performance enhancing foods and beverages for athletes and active people. In a recent product development meeting, Bob suggested that the company should acquire the newly developed technology, created by Pharma Corp., for infusing vitamin and mineral blends into food. Bob believed it would be easier to acquire the technology directly from Pharma Corp. Gary felt that the method of infusing blends in the new energy bars should be developed within the company. He knows it may take longer but feels that the competitive advantage it would provide was worth the wait. Joyce suggested that the company should work jointly with Pharma Corp. to develop an entirely new product. She felt that Power Nutrition Inc. did not possess sufficient financial resources to purchase the technology from Pharma Corp.
-Based on the scenario, which method of acquiring technology does Gary favor?

• A) Internal development
• B) Licensing
• C) Contracted development
• D) Purchase
• E) Research partnership

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Definitions:

Period Costs

Expenses that are not directly tied to the production of goods or services, such as selling, general, and administrative expenses, and are expensed in the period incurred.

Prime Costs

A calculation in cost accounting that signifies the sum of direct materials cost and direct labor cost.

Direct Materials

Specific raw materials that are traceable to the manufacturing process of a product, serving as an essential component in its production.

Indirect Materials

Materials used in the production process that cannot be directly linked to a specific product, such as lubricants for machinery.